China Central TV: champion of the people with a blurred picture

November 20, 2013 3:15 am

China Central TV: champion of the people with a blurred picture

By FT reporters

At the end of October, a young journalist in handcuffs, green prison jacket and a freshly shaved head appeared on China Central Television, the state-owned national broadcaster, and confessed to taking bribes in exchange for writing negative articles about a large Chinese company. Just days earlier, the newspaper that employed Chen Yongzhou, 27, had published front-page banner headlines calling for his release, while human rights groups had mobilised to defend him. But after his admission on national television, the issue quickly died away.Mr Chen’s is the latest in a series of televised public pre-trial confessions that have aired on the CCTV in recent months and have included British and US citizens being paraded before the camera to admit their crimes.

The performances, reminiscent of an earlier age in which political “struggle sessions” and show trials were the norm, have raised concerns inside China about the damage that they cause to the government’s stated goal of improving the rule of law.

But they have also raised an important question about the role of the state broadcaster and the balance it must strike between being a global media organisation, a commercial moneymaking venture and a political mouthpiece for the ruling Communist party.

The question is increasingly important to multinationals such as Apple, KFC, Volkswagen, Starbucks and Samsung, which have all been targeted in the past year by the broadcaster and accused of varying degrees of malfeasance or unfair practices in the Chinese market.

For major global companies, understanding why they have been singled out and on whose orders is crucial to avoiding one of the most dangerous pitfalls that can befall their businesses in the country.

In a recent book entitled Two Billion Eyes: The Story of China Central Television, author Ying Zhu says: “CCTV is full of serious-minded creators who regularly experience bouts of self-doubt, philosophical ambivalence and in some cases clinical depression.”

She also describes: “certain common themes, about ideals distorted or altogether thwarted by commercial and political pressure”.

Founded in 1958 as the country’s first TV station, CCTV did not convert to colour or extend its programming beyond a couple of hours in the evenings until the late 1970s.

Xinwen Lianbo: China’s Top Gun of news

Nowhere is the tension at CCTV between idealism, politics and commercial imperatives more obvious than at 7pm every night on its “Xinwen Lianbo” main news programme, which all regional television stations in China are required to broadcast.

A popular Chinese joke says that if anyone were to rely on this show for their information about the world they would come away with the following impressions:

After the first 10 minutes, which invariably features the activities of senior Communist cadres, they would believe that China’s leaders were all very busy.

The next 10 minutes of the half-hour broadcast would convince them that everyone in China was happy and prosperous, while the final segment would lead them to understand that everybody outside China was living in an abyss of suffering and extreme misery.

The format has barely changed in three decades, and the broadcast remains one of the most important ways for the Chinese government to issue decrees and political messages to the nation.

But in the age of social media, the show has borne the brunt of popular cynicism and ridicule over state control of information.

Ordinary netizens are quick to jump on mistakes or inconsistencies, such as when the show focuses heavily on negative events in western countries but ignores similar stories at home.

In 2011, a report about a new Chinese fighter jet showed the aircraft blowing another one up with a missile but ordinary viewers soon worked out that the footage in the news story was in fact taken from the 1986 Hollywood movie Top Gun and the featured fighter jet was American.

As late as 1978, fewer than 10m Chinese people had access to a TV, but today CCTV boasts more than 1bn potential viewers for its 45 channels that broadcast mostly soap operas, historical dramas and variety shows.

The broadcaster now earns billions of dollars a year in advertising revenue and its direct funding from the state accounts for a relatively minor part of its annual budget.

But it remains a vice-ministerial level government department and is always led by a senior Communist party official who has worked his way up through the party propaganda system.

The boss of the network, Hu Zhanfan, raised eyebrows in 2011, not long before he took the job, when he declared that the “first and foremost social responsibility [of journalists] is to serve well as a mouthpiece tool; this is the most core content of the Marxist view of journalism and it is the most fundamental of principles”.

According to current and former CCTV employees, the constant and pervasive censorship and political orders make it easy for individuals to become jaded.

So when they are presented with the opportunity to make money through unethical or, in some cases outright illegal deals, the temptation is heightened by their sense of disillusionment.

“The corruption inside CCTV is extremely serious,” says Hu Yong, an associate professor at the School of Journalism and Communication at Peking University and a former CCTV employee. “For example, [CCTV employees] will blackmail interviewees by threatening to expose them publicly or they will become public advocates for their interview subjects in exchange for economic benefits.”

Shi Feike, a senior journalist who once had close ties with CCTV, has a more nuanced view.

“The corruption inside CCTV is not necessarily more serious than in any other monopolistic state-owned enterprise in China,” he says. “There are many highly professional and ethical staff working at CCTV and the situation varies depending on the department, the channel and the individual programme.”

CCTV said: “CCTV has strict requirements regarding its employees’ professional ethics, and employs comprehensive disciplinary measures to restrict their activities.

“No matter if it is reporting on Chinese companies or foreign companies, our station always adheres to the principles of objectivity and fairness.

“If you pay attention to our station’s programming, you will find that our station broadcasts a large quantity of supervision type and exposure type programmes, and most of them are about Chinese domestically-produced products and brands.”

In the wake of serious food and product safety scandals, CCTV has taken on the role of self-appointed public watchdog, with a focus on the transgressions of multinationals operating in China.

In recent weeks, the broadcaster has targeted smartphone maker Samsung for allegedly unfair after-sales policies, while earlier this year it directed similar charges against Apple that prompted the company to apologise to Chinese consumers.

Other companies such as KFC, McDonald’sVolkswagen, and Walmart

have all been targeted by similar reports that appear to concentrate less on large Chinese companies, in particular state-owned monopolies that are often derided by consumers for their substandard products and services.

“The reasons for this bias towards reporting [negatively] on foreign companies are complicated; sometimes it is political as in the case of Google, often it is rent-seeking [trying to force large companies to buy advertising or pay bribes] and sometimes it is just the path of least resistance,” says Mr Shi.

“They cannot touch state enterprises because they will be censored so it is much safer to beat up on foreign companies. It will get on air without any trouble [from the censors] and it will gain support from nationalists.”

The negative campaigns do not always have the desired effect.

In late October, CCTV aired a seven-minute segment lambasting Starbucks for overcharging Chinese consumers for its coffee.

With more than 1,000 outlets across China and plans for the country to become its second-largest market after the US by next year, Starbucks wants to avoid a fight with the propaganda apparatus at all costs.

But on this occasion the reports were mostly greeted with derision rather than outrage from the wider public.

“Coffee is not a necessity for life, the price is determined by the market and it is up to Starbucks to charge what it wants,” said one user of China’s Twitter-like Weibo service whose message went viral. “If CCTV really cares about high prices why can’t they pay attention to prices that are actually related to people’s livelihoods?”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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